Pat McKeough responds to many requests from members of his Inner Circle for specific advice on specific stocks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle.

This week an Inner Circle member asked us about one of the energy stocks involved in developing alternate sources of fuel. Clean Energy Fuels serves customers who operate commercial vehicles powered by natural gas. T. Boone Pickens, a leading proponent of alternative energy to reduce American dependence on foreign oil, is a major shareholder in the company. Pat examines Clean Energy’s business and assesses its prospects as various alternatives to the internal combustion engine continue to compete for government support and consumer confidence.

A: Clean Energy Fuels Corp. (symbol CLNE on Nasdaq; www.cleanenergyfuels.com), is a North American seller of compressed natural gas (CNG) and liquefied natural gas (LNG). Its customers operate natural-gas-powered vehicles in the refuse, transit, ports, shuttle, taxi, regional trucking, airport and municipal fleet markets.

California-based Clean Energy first sold shares to the public for $12 each and began trading on Nasdaq in May 2007. Billionaire financier and hedge fund operator T. Boone Pickens owns 20% of Clean Energy’s shares.

The company provides natural gas to over 650 fleet customers with over 30,600 vehicles through 224 natural gas fuelling stations across Canada and the U.S.

In the three months ended March 31, 2014, Clean Energy’s revenue rose 2.4%, to $95.3 million from $93.0 million a year earlier. The company lost $0.30 a share in the latest quarter, compared to a $0.04-a-share loss.

Clean Energy’s $549.8 million of long-term debt is 50% of its $1.1-billion market cap. It holds cash of $318.8 million, or $3.55 a share.

Clean Energy hoping for increased government subsidies for natural gas conversion

Some commercial vehicles are powered by natural gas, but there are limitations to its widespread use in other types of vehicles, such as cars and trucks.

First, gas stations have limited natural gas storage and delivery infrastructure. As well, natural gas—whether CNG or LNG—must be stored in cylinders that are usually in the vehicle’s trunk, which reduces cargo space.

As well, consumers will likely be reluctant to convert, as many believe automotive natural gas systems are unsafe. And, while there is a chance of higher subsidies for switching cars to natural gas, governments and carmakers appear to prefer electric cars as a non-gasoline option.

Clean Energy has yet to earn a profit. The company will get a boost if the U.S. government increases subsidies for natural gas conversion, particularly in the trucking industry. Otherwise, it will have to grow by adding fuel stations or through acquisitions.

In the Inner Circle Q&A, Pat looks at the outlook for Clean Energy and its prospects of succeeding against stiffer competition if major gasoline retailers enter the field. He concludes with his clear buy-hold-sell advice on this stock.

(Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.)

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Do you think most people will still be driving gasoline-fuelled vehicles by the middle of the 21st century? If not, what type of engine do you think has the best chance of replacing it?